On 24 April 2017, the Beijing Intellectual Property Court (“ the Court”) published 18 classic cases concerning trademarks filed in bad faith. One of these cases dealt with a invalidation action filed by Tiffany and company (“Tiffany”), the luxury jeweler.

Tiffany prevailed in the invalidation action brought in 2013 against Chinese trademark registration no. 8009772 for “蒂 凡尼” (pronounced as “Di Fan Ni” in Mandarin) on wallpaper, carpets etc. in Class 27 in the name of Shanghai Zhendi Decoration Materials Co., Ltd. (“Shanghai Zhendi”). After the Trademark Review and Adjudication Board (“TRAB”) rejected the registration, Shanghai Zhendi appealed to the Beijing IP Court.

The Beijing IP Court held that Tiffany’s “TIFFANY” mark registered in respect of jewellery and precious stones had become well-known prior to the application date of the subject “蒂凡尼” mark. Not only is the “蒂凡尼” mark phonetically similar to “TIFFANY”, there is also only one Chinese character difference between Tiffany’s mark and the corresponding Chinese mark “蒂凡尼”. The  contested mark therefore constituted an imitation of Tiffany’s marks.

Tiffany Case Takeaway

This is a classic case about deterring bad faith registrations under Chinese Trademark Law. In deciding whether the mark concerned would mislead the public and cause detriment to the rights of the well-known trademark owner, the Court  considered all factors, such as the extent of the reputation of the well-known mark, the similarity between the marks, how related the designated goods are, the intention of the owner of the mark concerned, etc.

In the case at hand, Tiffany’s extensive and substantial use of the mark “TIFFANY” and of its Chinese mark “蒂凡尼” had resulted in a strong reputation in the market and an immediate correlation of any similar or identical mark to goods associated with the company, namely jewellery. Apart from registering the mark “蒂凡尼”, Shanghai Zhendi had also registered the English mark “DIFFANY” and the combination mark “蒂凡尼壁纸 DIFFANY” (essentially “Di Fan Ni Wallpaper DIFFANY”) and used the mark “蒂凡尼” together with “DIFFANY”. Shanghai Zhendi’s intention to ride on the reputation of Tiffany’s well-known mark could therefore not have been more obvious. The Court considered that the relevant public would likely associate the two marks, so that the source of the goods would be mistakenly be attributed to Tiffany and Tiffany’s rights would consequently be damaged.

Good News to Brand Owners

The outlined case demonstrates the Chinese Court’s determination to reject or invalidate trademarks which amount to acts of copying another’s well-known mark in bad faith. Yet this cannot be achieved without the vigilance of the legitimate trademark owners who need to be proactive, and take action as soon as such registrations are detected.

Michael Jordan, the legendary NBA star, has finally established his rights in his Chinese name after 5 years of intensive administrative and appeal proceedings in China.
In China, Michael Jordan is more commonly known and addressed by the Chinese name “乔丹” (pronounced as “Qiao Dan” in Mandarin) which resembles the pronunciation of his last name “Jordan”. The present case is another typical example of a foreign brand owner’s name being hijacked by a local Chinese entity. The hijacker used both “乔丹” and “QIAODAN” as trademarks on shirts, sport shoes and apparel manufactured and sold in China since 2000. Michael Jordan had a long and hard fight to get his name back. He is now half way through recovering his Chinese name “乔丹” trademark, whilst the transliteration of his Chinese name “QIAODAN” is still in the hands of third parties.

Facts and Ruling

From 2000 onwards, Qiaodan Sports Co. Ltd. (“Qiaodan Sports“) registered a number of trademarks including, “乔丹”, “QIAODAN” and a logo which was resembling Nike’s famous “Jumpman” logo. The original “Jumpman” logo is owned by Nike Inc. to promote its “Air Jordan brand” of basketball shoes and comprises a silhouette of Michael Jordan performing a slam dunk. In 2012, Michael Jordan sued Qiaodan Sports for infringement of his name rights in China. He asked the Chinese authorities to invalidate the registered trademarks “乔丹”, “QIAODAN” and the corresponding logo mark arguing that Qiaodan Sports’ trademarks are misleading consumers in the People’s Republic of China in a way that consumers may believe that these sport products like shirts, sport shoes and sport apparel sold by Qiaodan Sports are licensed or otherwise authorized by Michael Jordan.

The Trademark Review and Adjudication Board, the Beijing No. 1 Intermediate People’s Court and the Beijing High Court consistently came to the view that “Jordan” is a common American surname which is not readily and uniquely associated with Michael Jordan. The lower courts also perceived no exclusive and definitive link between Michael Jordan and “乔丹” and the sign “QIAODAN”. However, Michael Jordan decided to recover the valuable commercial rights in his name by appealing to the Supreme People’s Court.

Rulings of the Supreme People’s Court

Favorable Decision – “乔丹”

In these appellate proceedings Michael Jordan could successfully demonstrate that the sign “乔丹” is well-recognized in China and clearly associated with Michael Jordan personally. The Supreme People’s Court recognized an established a link between “乔丹” and Michael Jordan, and that Qiaodan Sports had “malicious intent” in registering “乔丹” as a trademark when it was fully aware of Michael Jordan’s reputation in China. Therefore, the use of “乔丹” by Qiaodan Sports infringed upon Michael Jordan’s prior rights in his name and the Supreme People’s Court ordered the “乔丹” trademark registration to be invalidated.

Unfavorable Decision –”QIAODAN”

“QIAODAN” is the English transliteration of “乔丹”. The meanings of “QIAODAN” and “乔丹” are identical. However, from the perspective of trademark use, the Supreme People’s Court could not find an established link between “QIAODAN” and Michael Jordan, as naturally Michael Jordan would not have used “QIAODAN” in any manner. The Supreme People’s Court therefore concurred with the lower courts’ decisions in the invalidation actions against “QIAODAN” and related formative trademarks in favor of Qiaodan Sports.

A Look Ahead

Michael Jordan’s success in recovering his Chinese name “乔丹” serves as an encouraging precedent to brand owners.

At least the Supreme People’s Court is seen to have considered all relevant circumstances, in particular the fairness and commercial value behind the name, in order to reach a finding that Michael Jordan can have his long lost Chinese name back as a trademark that is likely to be worth millions of dollars. The applicable laws and provisions have not changed.

The Chinese authorities and courts are willing to see and listen. The key to success is for foreign brand or name owners to present sufficient evidence to support their rights and show bad faith on the part of the trade mark squatter. Michael Jordan’s case and other similar cases involving brand owners such as New Balance and Hermès, emphasize the need for foreign brand owners to identify and register a Chinese version of their brands be it as a translation or as a transliteration as soon as possible, in order to ensure that they are protected against trade mark squatters.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Business conceptOn 7 November 2016, the Standing Committee of the National People’s Congress has formally passed China’s first comprehensive privacy and security regulation for cyberspace. Since the new Cyber Security Law (CSL) will come into effect on 1 June 2017, technology companies that are operating in or planning to expand to the Peoples Republic of China (PRC) are well advised to adapt their IT infrastructure and data architecture to the new law. Violations of the law may, at worst, lead to high fines, website shutdowns or license revocations. Some of the most significant changes brought about by the new law are briefly outlined below.

Who Is Affected and What Is New?

The CSL applies to operators of Critical Information Infrastructures (CIIs) and network operators. A network operator is defined as an operator of basic telecommunication networks, internet information service providers and key information systems. However, it is not clear which companies qualify as operators of CIIs. The exact definition of CIIs was left to the State Council of the PRC. So far, the Council has not given any specifications.

The new law includes several important and consumer protection provisions, but also some very controversial ones affecting technology companies.

Some provisions of the new law have aroused particular criticism. For example, instant messaging services and other companies qualifying as CIIs are only allowed to provide users with their full service if the users have registered under their real identities. In addition, CIIs are under an obligation to remove “prohibited content” from their service. In case of non-compliance with the latter requirement, CIIs are liable for a fine or worse. These requirements are believed to potentially restrict anonymity on the internet and to encourage self-censorship for online communication.

Under another controversial provision, companies are required to report to the relevant authorities any cyber security incident and vulnerabilities that they have experienced and to technically support and assist the authorities on national security matters and crime investigation. However, the nature and scope of the required technical support and assistance have not been defined. Thus, it is not clear whether the process might entail the provision of confidential information.

Among all the changes, the most significant change might be the so-called Data Localization Requirement. Under that provision, CIIs are required to store personal data and other important information within mainland China. However, it is not clear whether this provision only applies to personal data of Chinese citizens or to any personal data, including those of foreigners. In the first case, companies might be required to separate the personal data of Chinese citizens from the personal data of other individuals.

A Look Ahead

The CSL brings a lot of changes in the fight against cyber security threats. However, the law should be criticized for its lack of legal certainty, mostly resulting from overly broad formulated terms. As the CSL comes to effect in less than three months, technology companies are allowed little time to adapt to the new provisions. Compliance may in particular be of crucial importance for multinational companies with regard to the Data-Localization Requirement, as cross-border data transfer may be daily business. It remains to be seen whether the legal uncertainties will somehow be eliminated by the relevant authorities. Until then, affected companies need to be very cautious.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

busy Street scene with neon signs in Hong KongIntellectual Property (“IP”) rights are only as strong as the means to enforce them. Arbitration, as a private and confidential procedure, is increasingly being used to resolve disputes involving IP rights, especially when the dispute is between parties located in different jurisdictions. With the introduction of the Arbitration (Amendment) Bill 2016 (“Bill”), the Hong Kong government hopes this will give it an edge over competing arbitral seats in the region. The main effect of the Bill would be that enforcement of an award under Part 10 of the Ordinance would not be refused in Hong Kong under either the arbitrability ground or the public policy ground merely because the award involved IP rights.

The Scope of the Bill

The Bill has been in the pipeline for almost two years. It sets out a broad definition of IP rights to include, inter alia, rights to confidential information, trade secrets or know-how, rights to protect goodwill by way of passing off or similar actions against unfair competition. The bill clarifies that all disputes relating to the subsistence, scope, validity, ownership as well as infringement of IP rights are arbitrable. This includes the right to put the validity of a patent in issue in arbitral proceedings. The Bill includes a provision clarifying that an award relating to IP rights does not cover a licensee (whether or not an exclusive licensee) who is not a party to the arbitral proceedings. A licensee is, however, not prohibited from commencing arbitration proceedings without the owner of the IP being a party to the proceedings

All of the major arbitration centers, such as the International Court of Arbitration, the London Court of International Arbitration and World Intellectual Property Organization (WIPO) Arbitration and Mediation Center have adapted their arbitration rules to better suit IP disputes. As a result, the number of IP cases being heard by these centres continues to rise.

Conclusion

The international arbitration of IP disputes is on the rise, although it is still not as widely used to resolve disputes compared to other sectors (e.g., construction, energy and oil and gas). Hopefully the introduction of the Bill will reinforce the use of arbitration as a means to resolve IP disputes, as well as help consolidate Hong Kong’s position as an IP international dispute resolution centre.

Click here to read the full Mayer Brown JSM Asia IP & TMT: Quarterly Review (2016 Q4).

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Woman Eating Popcorn Whilst Watching Movie On LaptopOn 12 December 2016, the PRC Ministry of Culture released the Administrative Measures for Business Activities of Online Performances (the “Measures”). The Measures target providers of live performances broadcast or streamed over the Internet or a mobile network (“Streaming Services Providers”) who derive a profit from such activities through advertising, sponsorship or by charging for access. The Measures will come into effect on 1 January 2017.

Streaming Services Providers Are Now in Essence Content Gatekeepers

The new regulations require Streaming Services Providers to obtain a permit from provincial cultural affairs bureaus and display their license number in a prominent place on the website, i.e., on the homepage or landing page. Overseas Streaming Service Providers, including those from Hong Kong, Macau, and Taiwan, will have to apply for a license from the Ministry of Culture before launching a live channel.

This new provision follows a requirement issued by the Cyberspace Administration of China (“CAC”) in November 2016 requiring live Streaming Service Providers and distributors to obtain a permit for the provision of news information services over the Internet. The Measures introduce “know your performer” procedures for Streaming Services Providers in respect of all the performers in streamed shows, through ID checks, and provision of performers’ real names as many artists use pseudonyms or nicknames or aliases. Streaming Service Providers are also required to verify all data collected through follow-up interviews or through other means. Access to streaming services has been restricted and will only be available through registration. If chat room functions or other interactive services are offered on such sites, then Streaming Services Providers have the added obligation of having to report any illegal content posted by users to the relevant authority. However, there are no guidelines as yet as to what constitutes “illegal content.”

Why the Clampdown on Live and Video Streaming Through New Regulations?

In June 2016, 300 entities were found running live streaming content, some of which was of dubious quality trying to catch eyeballs with unseemly content and /or engaging in unlicensed news broadcasting according to a statement made by the CAC. Consequently, the Measures expressly prohibit six types of online content including content containing violence, cruelty, or vulgarity, and content which “infringes others’ legitimate interests.” Among the list of content expressly prohibited is online games for which a licence has not been obtained from the Ministry of Culture. This new registration requirement comes hot on the heels of the regulation of mobile apps released by the CAC in June this year which requires mobile apps providers to, among other things verify new app users’ mobile phone numbers and other identity information and have sanctions in place for users who publish content that violates applicable laws and regulations.

The rationale behind the Measures seems to be a desire to push back on the rising tide of Chinese streaming industry. In recent years, China has become a massive market for online video streaming boasting audiences in the tens of millions with the size of the market reaching RMB 15 billion (or US$ 2.17 billion) in 2015. Myriad problems, however, arise as part of this rapid expansion including unseemly content, piracy, and fraud. While some view the new regulation as an expansion of the government’s censorship over live streaming, others anticipate that the heavy registration scheme requirement might effectively deter online piracy to some extent.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Close up on microchip catching with tweezers on circuit board.On 2 December 2016, President Obama issued an administrative order to prohibit the proposed acquisition of a controlling interest in Aixtron SE (Aixtron) by Grand Chip Investment GmbH (GCI), a German company partially owned by Fuijan Grand Chip Investment Fund LP, a Chinese partnership with some Chinese government ownership. It was only the third time in history that a US president has formally blocked a proposed foreign acquisition of a US business due to national security concerns identified during the review process by the Committee on Foreign Investment in the United States (CFIUS).

Aixtron is a German semiconductor equipment maker; its US business (Aixtron US) accounts for about 20 percent of the company’s workforce and a similar percentage of the company’s global sales in 2015. The €670 million (approximately US$720 million) transaction was to have been financed by Sino IC Leasing Co. Ltd., which belongs to the Chinese government-established and -supported China IC Industry Investment Fund.

Though CFIUS’s national security reviews are not public, it appears that the CFIUS concerns centered around Aixtron’s work to manufacture equipment for Metal-Organic Chemical Vapor Deposition (MOCVD) systems. These systems are used to produce the multilayer crystalline films necessary for semiconductor production. The US Treasury Department (Treasury), acting in its capacity as the chair of CFIUS, said in its statement regarding the decision that “[t]he national security risk posed by the transaction relates, among other things, to the military applications of the overall technical body of knowledge and experience of Aixtron […] and the contribution of Aixtron’s U.S. business to that body of knowledge and experience.”

When faced with concerns from CFIUS, most parties to a transaction under review seek to mitigate those concerns under agreements with CFIUS or choose to abandon or restructure the transaction. That was not the case here; apparently CFIUS did not believe that its concerns could be mitigated, and the parties were unwilling to abandon or unable to restructure the transaction. Consequently, the transaction was referred by CFIUS to the president, who blocked the transaction, stating, “The proposed acquisition of Aixtron US by the Purchasers is hereby prohibited, and any substantially equivalent transaction, whether effected directly or indirectly through the Purchasers’ shareholders, partners, subsidiaries, or affiliates is prohibited.” The administrative order defined the US business broadly, including any Aixtron US assets such as patents and patent applications.

Click here to read the full Mayer Brown Legal Update.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Mobile phone users.On 12 August 2016, the Cyberspace Administration of China (“CAC”), the General Administration of Quality Supervision, the Inspection and Quarantine of China (“GAQSIQ”), and the Standardisation Administration of China (“SAC”) jointly released Several Guidelines to Strengthen National Cybersecurity Standardisation (the “Guidelines”). Under the Guidelines, mandatory national standards will be introduced to regulate critical fields such as major information technology infrastructure and classified networks in an effort to harmonise the current divergent local practice.

The National Information Security Standardisation Technical Committee will be the agency solely responsible for the review, approval, and release of national cybersecurity standards. The Guidelines propose to enhance the role of cybersecurity standards in guiding industrial development by, inter alia, establishing a standard-sharing mechanism for major cybersecurity projects as well as by incorporating standard requirements into the evaluation criteria of such projects and setting up professional qualifications. The Guidelines also stress the importance of establishing essential standards such as the “Internet +” Action Plans, “Made in China 2025,” and “Action Plans for Big Data” for critical projects such as big data security and cybersecurity audits. Finally, the Guidelines call for China’s active participation in international standard-setting activities with the aim of elevating China’s influence at the international level. As a sign of commitment to this, China will selectively adopt international standards which are deemed to suit China’s own situation.

The release of the Guidelines, on the one hand, is consistent with the Chinese government’s intent to have a tighter grip over China’s Internet and networks. On the other hand, standards unification will likely improve the transparency of cybersecurity governance and the predictability of cybersecurity enforcement, a positive step as we are still waiting for the finalisation of the draft Cybersecurity Law. While the content of the national cybersecurity standards may be redolent of heavy “Chinese characteristics,” there is a glimmer of hope as China has now signalled a desire to be involved in international cybersecurity standards-setting.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

iStock_81284397_XXLARGEOn 29 September 2007, a PRC entity, Xintong Tiandi Technology (Beijing) Company Limited (“Xintong”), filed a trademark application for the word “IPHONE” in class 18 (“Opposed Mark”) with the PRC Trade Marks Office (“TMO”). The goods covered by the application are a range of leather goods, wallets and cases under sub-classes 1801 and 1802. On 26 April 2010, Apple Inc. (“Apple”) filed an opposition against the Opposed Mark. It should be noted, however, that Apple does not have any China trademark applications or registrations for the word “IPHONE” in class 18 that pre-date the filing date of the Opposed Mark.

Both the TMO and, subsequently, the PRC Trademark Review and Adjudication Board rejected Apple’s opposition claim and allowed the application for the Opposed Mark to proceed to registration. Apple then filed an appeal to the Beijing No. 1 Intermediate People’s Court but had to suffer another legal defeat. The Intermediate People’s Court’s decision was, inter alia, based on the fact that most of the evidence of use of the word “IPHONE” submitted by Apple was taken after the date of filing of the Opposed Mark; and that the evidence presented was insufficient to show that the word “IPHONE” had attained well-known status before the application date of the Opposed Mark.

Appeal to the Beijing Higher People’s Court

In 2016, Apple filed a further appeal to the Beijing Higher People’s Court and argued, inter alia, that the word “IPHONE” had attained an extremely high level of fame and distinctiveness in respect of goods in class 9, such as mobile phones, and should therefore be recognized as a well-known trademark. Apple further alleged that the Opposed Mark was a blatant copy or imitation of Apple’s well-known trademark. The Higher People’s Court, however, found that Apple had failed to establish that its “IPHONE” mark had achieved well-known status at the relevant time, which is the date of filing of the Opposed Mark. At the time of the filing date, Apple’s iPhone products had only been launched in China for three months.

Whilst the Higher People’s Court decision is final, Apple may request for a re-trial with the Beijing Supreme People’s Court. Apple has already indicated its intend to do so.

Conclusion

This case emphasizes the need for international brands to thoroughly review and formulate their trade mark portfolio and filing strategy prior to launching relevant product or services in a particular market. It is vital to not only consider the core classes that are directly related, but also other classes that cover potential areas of future expansion or related products and services.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

iStock_000076330691_Large

In a recent decision, the Supreme People’s Court of China ruled that the use of a trademarked sign on goods manufactured in China solely for export purposes does not constitute “use” of a trademark. Consequently, such use could not be considered an infringement of a trademark registered in China.

The decision was given in a case involving a trademark which was used on goods that were produced for export to Mexico. The Supreme People’s Court ruled that the first and second instance courts erred in their finding of trademark infringement, because both courts had based their assessment of infringement on the sole fact that a sign identical or similar to a trademark, and in relation to identical goods, was used without authorization. However, in the eyes of the Supreme Court, the first and second instance courts had ignored an essential prerequisite – namely, that the alleged infringing act must constitute “trademark use in the sense of the trademark law.

The Supreme People’s Court determined that the use of a China registered trademark on goods that were manufactured in China solely for export purposes does not amount to trademark “use”. Consequently, there could be no finding of trademark infringement. The key element to note in this case was that the trade marked goods were not intended to enter the Chinese market. For this reason, the Chinese public could not have possibly been confused into thinking that the trademarked goods come from the same source or, at least, think that permission has been given to use the mark.

Takeaway Points

The decision resolves years of uncertainty about the position of Chinese courts, government and customs authorities on the so-called “OEM” (Original Equipment Manufacturing) principle. Although court decisions in China are non-binding authorities on future cases, judgments from the Supreme People’s Court are strongly indicative of possible future trends. Still, whether or not OEM constitutes trademark infringement remains a somewhat complicated issue that has to be resolved on a case-by-case basis.

In view of this Supreme People’s Court decision, foreign brand owners that have their marks registered in China will need to consider a potential defense of non-infringement available to local OEM manufacturers that deal with counterfeit trademark goods. Thorough and well-supported investigation can help ascertain whether the allegedly infringing goods were produced solely for export sales and whether the OEM manufacturers had knowledge (or should have had knowledge) of the foreign brand involved.

Roma, Italy - March 14, 2011: Sign of an opening soon Moncler shop in Via dei Condotti, center of fashion shopping in Rome. A poster of a model covers the shop window. On the left, another old palace of the street shows the name of Dior on its windowsIn 2013, Moncler S.P.A. (“Moncler”) became aware of the manufacture and sale of down jackets by Beijing Nuoyakate Garment Co., Ltd. (“Nuoyakate”). Nuoyakate used marks and logos confusingly similar to Moncler’s marks on its products and also applied for the registration of several trademarks and domain names confusingly similar to Moncler’s marks in China and other Continue Reading Moncler Awarded Highest Amount of Damages Ever for China Trade Mark Infringement